MINNEAPOLIS, December 16, 2010—The Federal Reserve Bank of Minneapolis is expecting the mild economic recovery in the Ninth District economy to warm up in 2011. Since the end of the recession in June 2009, economic conditions have slowly improved. Employment levels have recently crept higher, the manufacturing sector is expanding and consumer spending has increased moderately. The Ninth District includes Minnesota, Montana, North and South Dakota, northwestern Wisconsin and the Upper Peninsula of Michigan
The outlook includes information from the Minneapolis Fed’s statistical forecasting models, results from the fedgazette’s annual business conditions outlook poll of 408 district business leaders, a survey of 478 district manufacturers conducted by the Minneapolis Fed and the Minnesota Department of Employment and Economic Development, and a poll of 730 chamber of commerce members.
“Optimism is back,” said Toby Madden, regional economist at the Minneapolis Fed. “After two years of overall pessimism, businesses expect increased sales, employment and profits. In addition to the survey results, our statistical model predicts increases in income and employment.”
Employment grew in most areas of the district in 2010, following relatively sharp decreases in 2009. Nonfarm employment growth is expected to pick up across the district in 2011. Growth rates are expected to exceed 2010 rates in all areas except Minnesota, where the pace of employment growth will remain the same. In addition, employment will meet or exceed historical averages in all areas except South Dakota, where the growth rate will fall below the historical average. Unemployment rates in 2011 are expected to remain about the same as in 2010.
In addition to employment, growth is expected in personal income and consumer spending. Forecasting models predict faster personal income growth in Minnesota, South Dakota and Wisconsin. Business leaders in several states expect consumer spending to increase in 2011. However, survey respondents forecast only slight growth in wages.
The agriculture outlook is upbeat, with ample soil moisture and expected higher prices for outputs. This is coming off a very strong 2010 agriculture year. Respondents to the quarterly agricultural credit conditions survey expect higher farm income and capital investment.
The manufacturing sector is poised for additional growth in 2011, according to the annual survey of manufacturers. Sales revenue, orders, employment and capital investment all increased in 2010 from 2009 levels. The respondents expect even faster growth in all of these areas next year.
Meanwhile, district housing units authorized are expected to remain low. Following several years of decline, housing unit authorizations grew in most district states in 2010. The statistical model forecasts that 2011 housing units authorized will be down in Minnesota, North Dakota and Wisconsin and increase in Montana and South Dakota. However, business leaders expect declines in home building across the district.
More details on the economic forecast for the Ninth District can be found in the January issue of the fedgazette, the Federal Reserve Bank of Minneapolis’ quarterly newspaper, as well as on the following page: Ninth District Economic Forecasts.
As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of the Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve's Board of Governors. Together with its branch in Helena, Mont., the Minneapolis Fed serves the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.